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Title:R&D and Firm Performance in a Transition Economy PDF Logo
Authors:Czarnitzki, Dirk
Kraft, Kornelius
Issue Date:2006
Series/Report no.:ZEW Discussion Papers 06-33
Abstract:We estimate the effects of R&D on firms' credit ratings and on financial distress. The main purpose is the comparison of firms in Western Germany and Eastern Germany as a transitional economy. Innovative activity has a positive impact on firm value proxied by ratings in Western Germany, but a negative impact in Eastern Germany. We also consider future financial distress, and find that R&D in Eastern German firms leads to higher default risk, in contrast to Western Germany. There, R&D enhances future performance. This result is highly politically relevant, since the high level of subsidies present in Eastern Germany may be subject to misallocation.
Subjects:Transitional Economy
Credit Rating
Bankruptcy
Innovation
Policy
JEL:P27
O31
L33
O12
O38
Document Type:Working Paper
Appears in Collections:Publikationen von Forscherinnen und Forschern des ZEW
ZEW Discussion Papers

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